Opportunities: In the area of Project Finance, the growth in PPP and Renewable Energy globally present enormous opportunities.
To assess project viability and an appropriate structure it is however essential to ask some key questions about risk assessment, potential returns, the structuring of any project and the capital structure, such as:
Where are we in the economic and credit cycle and what are the implications for project risk management?
Have the principal political, government policy and regulatory risks been identified, assessed and mitigated?
How will technology impact the project?
Are the interests of the main parties to a project properly aligned in terms of objectives, risks and returns?
Have you identified, mitigated and allocated the key project risks to parties that can absorb and manage key risks on a cost effective basis, both on an operational and financial basis?
Are the project financial forecasts realistic?
What would be the most appropriate project and capital structure, and how will currency, interest rate and commodity price exposures be managed?
Is the documentation clear in reflecting the objectives, rights and responsibilities of the project counterparties, and can the contracts be easily enforced?
What are the remedies if the project fails to meet its objectives and cannot meet the financial performance requirements in the financing documents?
Each project has its own characteristics. It is however essential to ask some key questions about any project. The file accessible via the link below will provide you with some of these key questions to help you assess and structure Project Finance transactions.
As with my other posts, I welcome your comments and suggestions.
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